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Massive Layoffs Continue: 533,000 Jobs Lost in November

December 05, 2008 8:49 AM

ABC News’ Scott Mayerowitz reports: The American economy was dealt another brutal blow this morning when the government announced that a startling 553,000 jobs were cut in November.

The number was much worse than Wall Street analysts had predicted. It was the largest monthly decline since December 1974 and shows just how long and bad this recession is becoming.

Since the start of the year American employers have shed 1.8 million jobs.

The stock market was poised to open lower after this worse-than-expected news.

The unemployment rate also shot up from 6.5 percent to 6.7 percent, the Labor Department said. It is the highest unemployment rate the country has seen since October 1993.

As the recession deepens and consumers and companies cut back their spending, American businesses are slashing jobs to try to remain profitable. Just about every day, another company announces a big round of layoffs. The latest came yesterday when AT&T said it was eliminating 12,000 jobs, about 4 percent of its work force.

The jobs losses have been very widespread with just about every industry affected. Large layoffs have been seen in manufacturing, construction, financial firms, retailers, travel and leisure and hospitality. Health care remains one of the few fields where jobs are holding their own, if not growing.

December 5, 2008 | Permalink | User Comments (49) | TrackBack (0)

Paulson's Piggy Bank Running Low

December 04, 2008 7:17 PM

ABC News' Charles Herman reports: Could the $700 billion TARP funds be used to help the auto industry?  The White House is not in favor of that idea.

Another question:  Is there $34 billion left in the first batch of funds provided to the Treasury Department? On the surface, no.

Since October, Treasury Secretary Henry Paulson has had at his disposal $350 billion, half of the total TARP funds.  To date, he has used or committed $330 billion of those funds.

• $250 billion available to financial institutions.  As of 11/25/08, $161.5 billion has been provided to 53 institutions.
• $40 billion for AIG.  AIG received the money on 11/25/08.
• $20 billion in additional funds for Citigroup announced last week.
• $20 billion for the creation of a “consumer asset backed securities market established by the Federal Reserve Bank of New York.”

That leaves a $20 billion hole for a $34 billion peg. 

To make funds available to the auto industry, Paulson could take some money from the “financial institutions” pot, but the impact on financial institutions, the credit market and the stock market if less money is available is unclear. 

Requesting the remaining $350 billion of the $700 billion TARP funds could be tricky.  Paulson has indicated that he is not inclined to draw down those funds.  Then again, that might change if the Treasury Department decides it needs money to fund a program to reduce interest rates.  And Congress might not be inclined to let him have the money.

For Paulson to receive the remaining half of the TARP funds, the president would have to provide written notice to Congress that the treasury secretary needs the money.  Unless Congress issues a joint resolution of disapproval within 15 days of receiving that notice, the money will be his to spend.

December 4, 2008 | Permalink | User Comments (15) | TrackBack (0)

Recession Hits One-Year Anniversary

December 01, 2008 1:36 PM

ABC News' Scott Mayerowitz reports: It’s official: The United States is in a recession.

The Business Cycle Dating Committee of the National Bureau of Economic Research announced this afternoon that it had concluded that the country entered a recession in December 2007. The U.S. economy had been growing since November 2001.

The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators,” the committee said in a news release.

The committee noted that after December the number of people employed started to decline. The country lost more than 1.2 million jobs in the first 10 months of the year. Additionally, manufacturing declined during that period.

While the recession started nearly a year ago, it takes the bureau normally six to 18 months to officially declare one -- to remove any doubt and so it can accurately declare a state date.

Today’s announcement wasn’t really a surprise to anybody. We have long known that 49 states were in or at risk of recession. And all the other telltale signs existed: shrinking GPD and mounting job losses.

The White House responded to the private group’s determination this way:

"As we’ve always said, NBER determines the start and end dates of business cycles, and they’ve done that,” said Deputy Press Secretary Tony Fratto. “But what’s important is what is being done about it. The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that’s where we’ll continue to focus. Addressing these parts of the economy will help to return the economy to economic growth.”

It means we’re already a year in to the current down cycle, which makes this recession longer than the average post-World War II recession (10 months) and so-far the third worst since 1945 (Nov. 1973 and July 1981 recessions both lasted 16 months).

It also means the current Bush administration saw two official downturns. The last time that happened was during the first Reagan term (January 1980 and July 1981).

The average recession since 1854 has lasted 17 months, but since the turn of the last century we’ve seen a marked reduction in the length of down cycles. Since 1900, recessions have averaged 14 months; just 10 months in the post-WWII era.

The worst recession of the modern era: 43 months from August 1929 to March 1933. To best that milestone, the U.S. would have to be contracting through August 2011.

For more information on the bureau’s decision, check out the news release: http://www.nber.org/dec2008.html

December 1, 2008 | Permalink | User Comments (60) | TrackBack (0)